What Happens to Banking Solutions If RegTech Becomes De-RegTech?

President-elect Trump’s victory has been called everything from black-swan to white-lash. He is a question mark, especially with regard to financial institutions (FI) policies.

Trump’s advisors are a blend of conservatives and populists. He may roll back banking regulation, as he promised to do with Dodd-Frank because it created unjust burdens on community banks. He may revive regulation, such as Glass-Steagall, which separated commercial and investment banking.

Others who rode on his coat-tails are less enigmatic. As the GOP held the Senate, Sen Mike Crapo (R-Idaho) is expected to lead the Senate Banking Panel next year. He also favors regulatory relief to smaller institutions. He will succeed if he can continue bi-partisan compromise with Democrats, including far-left Sen. Elizabeth Warren (D-Massachusetts), and further-right House Financial Services Committee Chairman Jeb Hensarling (R-Texas).

Politics, and the lenses through which voters view the world, shift with elections. But fundamental business needs rarely change. FIs always need to satisfy customers, grow revenue, reduce costs, move faster and understand more. Certain components of data and software solutions that will always reign in cycles of regulation or de-regulation:

2. Uniqueness, as it applies to proprietary rather than commodity data, whether collected in a fresh way or combined in a new way

3. Flexibility, or the capability to join disparate global data sources, organize them, and output the results to a variety platforms operating in different time cadences

4. Analytics, or the blend of minds and machines to mine “big data” and draw conclusions presented in an understandable way, all while minimizing false positives

Solutions that do these things will always be in demand, though the demand will shift to new use cases and new value propositions.

Political surprises like the US elections and Brexit have been called, “people making decisions they don’t fully understand.” While businesses always operate under uncertainty, managers will render the best decisions they can muster. KYC solutions that enable managers to assemble data, quantify their choices and predict outcomes will win, regardless of regulatory environment.

The state of federal (and state) regulations are anyone’s guess right now. Many banks, third-party payment processors (TPPPs) and third-party senders (TPSs) have already concluded de-regulation would open up new, previously out-of-favor market segments. Those who choose to expand their risk appetite will need discipline. G2 KYC Solutions for banks provides visibility to blind spots in banks portfolios. Find out more here.